Media report: Hellenikon Casino bid winner Mohegan faces default risk |

Wednesday 29th April 2020

ATHENS - The Connecticut-based Mohegan Gaming & Entertainment, awarded a license for a casino when development begins on the long-delayed 8-billion euro ($8.68 billion) abandoned Hellenikon International Airport, is at risk of default, said Moody's Investors Service.

The rating agency downloaded MG & E into speculative territory with a "negative" outlook, said, lowering the mark on the company's bonds to Caa2 from B3, meaning there are just three lower grades that could be assigned to the debt. Bonds with any of the three Caa grades are deemed to be in poor standing and carry "very high credit risk."

MG & E won the casino license in Athens after the only other bidder and rival Hard Rock was knocked out by a technicality, but is appealing and said it would ultimately win, and said it had a substantially better financial standing and international experience, even before COVID-19.

Like other businesses not operating during lockdowns aimed at preventing the spread of the COVID-19 Coronavirus, especially in areas where large groups would gather, the casino and company have taken a major hit in revenue losses, closed for six weeks as of April 28.

"The disruption in casino visitation is pressuring earnings and results from efforts to contain the spread of the coronavirus, including recommendations from federal, state, and local governments to avoid gatherings and avoid non-essential travel. These efforts include mandates to close casinos on a temporary basis," noted Moody's.

Earlier this month, MTGA missed a $19.7 million interest payment, and while that's not seen to indicate an imminent default, financially sturdy, highly rated companies rarely avoid debt or interest service, the site said.

"In Moody's opinion, MTGA's failure to make the scheduled interest payment of approximately $19.7 million due on April 15, 2020 with respect to the company's 7.875% senior notes due 2024 reflects in part MTGA's highly uncertain operating environment," said the credit rater.

"More specifically, MTGA's continued exposure to travel disruptions and discretionary consumer spending have left it vulnerable to shifts in market sentiment in these unprecedented operating conditions, and makes it vulnerable to the outbreak continuing to spread," said Moody's.

Mohegan said it didn't make that payment because it's looking to conserve cash, and that it believes it will be able to cover that $19.7 million before the end of a 30-day grace period. The operator had $187 million in cash on hand as of March 30, according to Moody's.

Experts believe Mohegan Sun and Nutmeg State rival Foxwoods can endure the downturn, but both carry massive amounts of debt, the gambling news site said, with no indication whether it would affect the awarding of the Greek bid.

The firm's speculative "ratings also reflect the negative effect on consumer income and wealth stemming from job losses and asset price declines, which will diminish discretionary resources to spend at casinos, including MTGA's casino properties, once this crisis subsides. Additionally, because of approaching October 2021 maturities and weak earnings, MTGA's refinancing and default risk are high," according to Moody's.

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